US Justice Dept warns pharma over foreign "bribes"

The US Department of Justice has warned drugmakers that, in the months and years ahead, it “will be intensely focused on rooting out foreign bribery in your industry.”

Pharmaceutical companies must ensure that they are dealing honestly and fairly with patients, health care providers, private insurers and government programmes, according to Lanny Breuer, Assistant Attorney General within the Criminal Division of the US Department of Justice. If they do not, the Department “will be vigilant in holding companies and individuals who break the law accountable,” not only through civil actions but also criminal indictments, he told the Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum in Washington late last week.

Application of the US Foreign Corrupt Practices Act (FCPA) - which prohibits the offer of bribes to foreign government officials as a means of obtaining business – is one area of criminal enforcement which the Division will focus on “in the months and years ahead,” he warned. According to the Pharmaceutical Research and Manufacturers of America (PhRMA) 2009 membership survey, close to $100 billion, or roughly a third of PhRMA member companies’ total sales, are generated outside of the USA, where health systems are regulated, operated and financed by government entities to a significantly greater degree than in the USA. As a result, a typical US pharmaceutical company that sells its products overseas will likely interact with foreign government officials on a fairly frequent and consistent basis.

“In the course of those interactions, the industry must resist short cuts. It must resist the temptation and the invitation to pay off foreign officials for the sake of profit,” Mr Breuer told the conference.

He acknowledged that he could not give “binding guidance” on who exactly qualifies as a “foreign official” in the context of a public health system. Some are obvious, such as health ministry and customs officials, but others may include doctors, pharmacists, lab technicians and other health professionals.

Nevertheless, the depth of government involvement in foreign health systems, combined with fierce industry competition and the closed nature of many public formularies, creates a significant risk that corrupt payments will infect the process, said Mr Breuer, and he warned that not only does the Criminal Division stand “ready to ferret out this illegal conduct…we are uniquely situated to do so.” Additional expertise is located within the Division’s health fraud group, and it is also working closely with the Securities and Exchange Commission (SEC) and experiencing increasing international cooperation, coordination and information-sharing.

Any drugmaker that discovers an FCPA violation within its organisation should “seriously consider” disclosing it to the Department and cooperating with the investigation, as it will receive “meaningful credit,” without any request or requirement that they disclose privileged material, Mr Breuer advised the conference.

On the other hand, the cost of “not doing the responsible thing” can include significant fines, unwanted negative publicity, a potentially devastating impact on stock prices and possible exclusion from Medicare and Medicaid, he warned.